Americans just aren’t as into Volkswagens as they were during the hippie heyday of the old VW Beetle and Type 2 van. While Volkswagen Group is the world’s second-largest automaker, in the United States the brand barely registers among the top automotive sellers. In January, Americans bought almost as many Honda CR-V crossovers as all 16 VW branded models combined.
The German owner of Audi, Porsche and Bentley is setting up an engineering and planning center at its sole U.S. factory, in Chattanooga, Tennessee. The center, the first of its kind for any German automaker, will employ about 200 engineers who will try to solve the company’s U.S. problem by developing vehicles with the American consumer in mind.
The center is part of a $900 million U.S. investment that includes $600 million to expand the Chattanooga facility to accommodate a new midsize SUV that’s planned for 2017.
“A lot of hard work is going into adding this second vehicle line to the plant, but it is crucial to our efforts to move forward in America,” Christian Koch, CEO and president of Volkswagen Chattanooga, said in a statement.
Headed by Matthias Erb, a former boss of Audi’s American operations, the engineering and planning center will be housed temporarily at a building adjacent to the factory. The site currently produces the Passat full-size car for the U.S. market, Volkswagen’s second best-selling vehicle after the Jetta sedan.
Volkswagen likely will seek to refresh its line of crossovers and larger SUVs to meet American consumer demand, which is shifting away from compacts and sedans. In January the company reported U.S. sales declines in every vehicle, except the Passat and the Golf/GTI hatchbacks.
Americans also are deeply loyal to pickup trucks, but Volkswagen hasn’t said if it plans to make a truck for the U.S. market. In 2012 it reportedly reached out to Canadian and U.S. dealerships about selling its Amarok midsize truck in North America, but so far the company has steered away from challenging American and Japanese automakers in the truck segment.
For now, Volkswagen seems focused on building out its SUV segment amid falling sales for its Touareg midsize luxury crossover and Tiguan compact crossover.